Woolworths share price on watch following soft Q1 update

Woolworths shares will be on watch following the release of the supermarket giant's Q1 update…

| More on:

Should you invest $1,000 in Impedimed Limited right now?

Before you buy Impedimed Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Impedimed Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 5 December 2024

A female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recently

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Woolworths Group Ltd (ASX: WOW) share price will be on watch today.

This follows the release of the retail giant's first quarter update.

Woolworths share price on watch following soft Q1 update

For the quarter ended 2 October, Woolworths reported a 1.8% increase in group sales to $16,363 million. This growth was underpinned by its Big W and Australian B2B businesses, which offset softer sales from the Australian Food business and its New Zealand equivalent.

In respect to the key Australian Food business, its sales were down 0.5% over the prior corresponding period to $12,204 million. This was due to sales weakness in the online channel, which fell 10.8% to $1,239 million. Store-originated sales from Woolworths supermarkets rose a modest 0.5% to $10,608 million and its Metro Food store sales grew 10.8% to $284 million.

Overall, Australian Food comparable sales dropped 1.1% over the prior corresponding period, well short of Goldman Sachs' forecast of 3% growth. That's despite inflation driving average prices 7.3% higher compared to the first quarter of FY 2022.

Management commentary

Woolworths CEO, Brad Banducci, commented:

In our Food businesses, sales were below the prior year as we cycled strong growth driven by COVID-related restrictions in F21 and F22. Australian Food sales decreased by 0.5% and New Zealand Food sales were down 2.5% compared to the prior year. On a three-year compound annual growth basis, sales in Australian Food were up 5.3% and up 4.7% in New Zealand Food.

In Australian B2B, Q1 sales increased by 26.0% compared to the prior year primarily due to strong growth from PFD. BIG W sales were up 30.1% (3-yr CAGR: +8.9%) cycling lockdown-related temporary store closures in the prior year.

eCommerce sales in Australian Food (-10.8%) and BIG W (-51.8%) were lower than the prior year as customer mobility increased. However, on a three-year CAGR, sales growth remained strong, increasing by 43.5% and 43.7% respectively. eCommerce penetration in Australian Food was 10.2%, 6.2 pts above Q1 F20 and 9.4% in BIG W, 5.3 pts above F20. New Zealand eCommerce sales grew at 5.9% (3-yr CAGR: +23.3%) with penetration of 14.2%, up 5.5 pts on F20.

Outlook

Banducci advised that sales trends have improved in October in the Australian Food business and there are signs of stabilisation in the New Zealand Food trading environment. However, the latter's earnings are being impacted by the combination of lower sales and materially higher wage inflation.

Nevertheless, the CEO appears cautiously optimistic on the remainder of the first half. He concludes:

There are 51 days until Christmas and we are very focused on delivering a much-needed inspirational and affordable festive season for our customers. Ongoing supply chain volatility and the possibility of another wet summer will be key challenges to navigate but we are seeing strong early sell through of seasonal lines and we remain cautiously optimistic for the period ahead.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

a cute young girl with curly hair sips a glass of milk through a straw with a smile on her face.
Consumer Staples & Discretionary Shares

How are A2 Milk shares set to perform in 2025?

Wil investors be nourished next year?

Read more »

Woman customer and grocery shopping cart in supermarket store, retail outlet or mall shop. Female shopper pushing trolley in shelf aisle to buy discount groceries, sale goods and brand offers.
Consumer Staples & Discretionary Shares

How much could $5,000 invested in Coles shares be worth in a year?

Do analysts expect good returns from this supermarket giant's shares?

Read more »

A beautiful woman wearing make-up and long strings of pearls around her neck sits on a luxury old-style chair with an antique lamp beside her as she smiles happily with her head in the air as though she is very satisfied with something.
Consumer Staples & Discretionary Shares

I'd love to buy more Wesfarmers shares, but I won't right now. Here's why

It's hard to buy Wesfarmers when it's more expensive than Google...

Read more »

Couple look at a bottle of wine while trying to decide what to buy.
Consumer Staples & Discretionary Shares

Why is the Endeavour share price trading at all-time lows?

Let's take a look.

Read more »

domino's pizza share price
Consumer Staples & Discretionary Shares

Should I buy Domino's shares before the New Year?

Are Domino’s shares a good buy for 2025 after tumbling 50% in 2024?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Consumer Staples & Discretionary Shares

Kogan shares worth $17 million sniffed by corporate watchdog

A well-timed and lucrative sale has the regulator intrigued.

Read more »

A man folds his arms as he stands amid a stack of used tyres.
Share Market News

Here's how the ASX 200 market sectors stacked up last week

The consumer staples sector came out best during a poor week of trading for the ASX 200.

Read more »

supermarket asx shares represented by shopping trolley in supermarket aisle
Consumer Staples & Discretionary Shares

Is the Coles share price a buy amid its 2025 outlook?

With its outlook in mind, are Coles shares a bargain?

Read more »